Last year had the greatest number of announced food and beverage mergers and acquisitions nationwide since 2007, according to Food and Beverage Industry Snapshot, a recent report by Grant Thornton Corporate Finance.

"Food and beverage deals we saw through the economic downturn were probably some of the strongest because they're well-positioned to go to market in a tough environment," said Jeff Bradford, a partner in Grant Thornton's national transaction advisory services practice in Milwaukee.

While Milwaukee has not been the epicenter of the deals, conditions are right for the industry to heat up in the area this year, Bradford said.

"I certainly expect food and beverage to tag along with the rest of the market," he said. "There are a lot of dynamics in the food and beverage space that could lend to being even more active than other spaces."

There are more than 240 food processing companies employing about 14,000 workers in the seven county Milwaukee area, and 12 of them have global headquarters here, according to a recent Milwaukee 7 report.

Many of the state's food processors are family agriculture businesses, and this could be a good time for an exit.

"We're seeing a lot of presale activity," Bradford said. "The profile of the Wisconsin food and beverage space lends itself pretty well to that because of the number of family-owned businesses."

The supply side has seen a very slow deal market during the recession and companies are now seeing a good set of numbers for the trailing 12 months' earnings, so there's cash and pent up demand as well. In addition, the capital gains tax rate is expected to increase at the end of 2012, so many businesses will try to complete deals this year.

"The stars are all aligned," Bradford said.

In addition, the food and beverage sector wasn't hit as hard by the recession as some other industries.

"Through the economic downturn, most food and beverage deals were stronger," Bradford said. "Those businesses are pretty recession resistant. Everyone has to eat."

Commodity prices rose in 2011 as a result of poor weather conditions and an uptick in demand from emerging economies, according to the report.

Going forward, commodity fluctuations will ferret out weaker businesses and create opportunities for stronger ones, Bradford said. Companies that are good at commodity hedging, purchasing in advance and managing input costs are likely to do well.

Many of the food and beverage companies coming to market in the Midwest recently have been distressed and needed a suitor to save them.

"Some of the deals that we've been working on are deals where there's a distressed seller and in more than one case that distress has been caused by inadequate management of commodity risk," Bradford said.

Food and beverage EBITDA multiples were driven high by several large transactions in 2010, so 2011 saw lower values. During the recession, only the strongest or most distressed companies went to market. The broader mix of sellers in 2012 is likely to also draw multiples lower, Bradford said.